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Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372 Exercise 45
Analyzing the Impact of Transactions on the Current Ratio
BSO, Inc. has current assets of $1,000,000 and current liabilities of $500,000, resulting in a current ratio of 2.0. For each of the following transactions, determine whether the current ratio will increase, decrease, or remain the same.
a. Purchased $20,000 of supplies on credit.
b. Paid Accounts Payable in the amount of $50,000.
c. Recorded $100,000 of cash contributed by a stockholder for common stock.
d. Borrowed $250,000 from a local bank, to be repaid in 90 days.
BSO, Inc. has current assets of $1,000,000 and current liabilities of $500,000, resulting in a current ratio of 2.0. For each of the following transactions, determine whether the current ratio will increase, decrease, or remain the same.
a. Purchased $20,000 of supplies on credit.
b. Paid Accounts Payable in the amount of $50,000.
c. Recorded $100,000 of cash contributed by a stockholder for common stock.
d. Borrowed $250,000 from a local bank, to be repaid in 90 days.
Explanation
Verified
Verified
Total current assets is $1,000,000
Total...
Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
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